DA Hike Of 2% Expected Before 8th Pay Commission Setup: Unions

The dearness allowance for central government employees and dearness relief for pensioners is expected to be increased by 2% before the formation of the 8th Pay Commission, according to two major staff forums.

The DA and DR, aimed at offsetting the impact of inflation, are revised biannually by the centre. The hikes are usually announced in March and October, and are implemented retrospectively from January and July, respectively.

"As per our calculation, the dearness allowance will probably be of 2%," Rupak Sarkar, president of the Confederation of Central Government Employees and Workers, told NDTV Profit on Thursday.

The Confederation chief pointed towards the Consumer Price Index for Industrial Workers data, released last month by the government. The data showed that the index, which serves as a key gauge to measure the impact of inflation on industrial workers, declined by 0.8 points to 143.7 in December 2024.

The year-on-year CPI inflation for industrial workers in December stood at 3.53%, as compared to 4.91% in the same month of the preceding year, the Labour Bureau said in a release issued on Feb. 18.

The relative slowdown in inflation for industrial workers — a key metric used to determine the DA and DR — is the reason why the hike in allowance could be lower, as compared to the previous two revisions, employee unions leaders suggested. The allowance was increased by 3% in October last year, and 4% in March 2024.

Although it seems that a 2% rise in DA could be on the cards, "the final decision lies with the government," Sarkar said.

The staff side of National Council-Joint Consultative Machinery — an official platform to resolve disputes between the government and its employees through dialogue — is also holding similar expectations. The 2% hike in DA is the "probability", NC-JCM (Staff Side) Secretary Shiv Gopal Mishra said.

The DA hike with effect from January 2025 is expected to be announced soon, whereas the 8th Pay Commission — whose formation recently received the government's nod — is also likely to be formally set up in the coming days. The panel is likely to start its work from April, Expenditure Secretary Manoj Govil told publications last month.

The upcoming DA hike this month will likely be the last to be announced before the formal setup of the 8th Pay Commission. Although the allowance will continue to be revised on a biannual basis, this would probably be the final revision before the commission initiates its deliberations with various stakeholders.

Following the last DA hike of 3% in October, the allowance increased to 53% of the basic pay. If the DA is increased by 2% in the next set of revision, then the allowance will climb to 55%.

The staff side of NC-JCM, in its meeting with Department of Personnel and Training Secretary Rachna Shah on Feb. 10, said the DA should be merged with the basic pay "immediately".

Notably, under the 5th Pay Commission — which lasted from 1996 to 2006— the rule was to merge the basic pay with DA, once the key allowance crosses 50%. Accordingly, the government had integrated DA with basic salary in 2004. However, the 6th Pay Commission, implemented from 2006 to 2016, had discontinued this norm.

The 7th Pay Commission had proposed the restoration of this rule, but the government had not accepted it back then, Mishra said. The employee forums expect the 8th Pay Commission to reintroduce the rule on merging DA with basic pay once it crosses 50%.